Economics in a time of Recession

Economics
Recessions are like a bad spell of nausea only they last longer. They jolt us out of our economic complacency and make us worry and not spend money. This unwillingness to spend money and ineffable thing "confidence" leads to people economizing. Next thing you know you aren’t buying that new Mercedes Benz or Lexus and as a result you see a lot of Mercedes Benz workers out on the street saying "Feed me!" or whatever that would be in German. Money stops coming in but mortgages still have to be paid. Savings get depleted. Real estate companies find they have a lot of repo houses that they can hardly give away. Car companies find they have a lot of repo cars they can hardly sell. No one is lending money even though the prime rate has dropped to zero. No one is driving their repo cars and the bottom has fallen out of the price of fuel. Hugo Chavez, why don’t you suck on that, buddy.

One wonders of course if 700 billion here and 800 billion there if this isn’t going to be enough to get the world economy going again. This is indeed the winter of our discontent. Don’t knock global warming until you’ve tried it. If this is such a huge problem, then why is it only 5 degrees F. outside right now. This is the coldest damn winter we’ve had in about 15 years. We have just finished eight years with a faux conservative prez and now are beginning another few years of a real liberal prez, and all we have really gotten in so far as change, has been a slight darkening of skin color.

A recession is like a train wreck. People sell stock for various reasons. People sell stock because they need money. This causes the price to go down. Other people get worried and sell their stock because they are afraid of losing money represented by the value of their stocks. People sit on the sidelines because they are afraid to invest money, figuring they will lose it in bad economic times.

Governments respond in various ways. Some are raising taxes because, with a sinking economy there is less revenue coming in. This makes matters worse for everyone not in the public sector. This shifts the pain from the public sector into the private sector. Even in the private sector there are winners and losers. The large very visible industries like the US auto manufacturers get bailouts because they represent a large and highly visible interest group in politics. The smaller businesses without such friends in high places die on the vine. Other governments, especially the Feds, are shoveling money into the economy. This money tends to go into certain things that the government approves of, such as expanding the public sector permanently. They talk about "creating jobs" as if jobs are the goal. Jobs shlobs, the thing the people need is money.